[Federal Register Volume 65, Number 160 (Thursday, August 17, 2000)]
[Notices]
[Pages 50262-50263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20883]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43145; File No. SR-PHLX-00-35]


Self Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc., Relating to an Increase in the Maximum Size of Options 
Orders Eligible for Delivery Through the Automated Options Market 
System

August 10, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 10, 2000, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Phlx. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx proposes to change the text of Phlx Rule 1080(b)(ii) to 
reflect an increase in the maximum order size for the delivery of 
option orders through its Automated Options Market (``AUTOM'') System. 
Currently, orders up to 500 contracts are permissible for delivery 
through AUTOM. The Exchange is proposing to increase the maximum order 
size to 1,000 contracts.

II. Self-Regulatory Organization's Statements Regarding the Purpose 
of, and the Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Phlx included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Phlx has prepared summaries, set forth in sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    AUTOM is the Exchange's electronic order routing, delivery, 
execution and reporting system for equity and index options. Orders are 
routed from member firms directly to the appropriate specialist on the 
Exchange's trading floor. AUTOM orders of 50 contracts or fewer are 
currently eligible for AUTO-X, the automatic execution feature of 
AUTOM. These AUTO-X orders are executed automatically at the 
disseminated quotation price on the Exchange and reported to the 
originating firm. Those orders that are not eligible for AUTO-X are 
handled manually by the specialist. The current proposal does not 
affect AUTO-X order size eligibility.
    The Exchange proposes to increase the maximum eligible size of 
AUTOM orders from 500 to 1,000 contracts. This change is intended to 
extend the use of the AUTOM system to larger sized orders, which would 
provide more efficient order handling and processing for those orders. 
The Exchange notes that the maximum AUTOM order size has remained the 
same since 1995, when it increased from 100 to 500 contracts.\3\
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    \3\ See Securities Exchange Act Release No. 35782 (May 30, 
1995), 60 FR 109 (June 7, 1995).
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    In light of the Phlx's experience with AUTOM over the past five 
years, during which the maximum AUTOM order size has been 500 
contracts, the Exchange believes that it is appropriate, at this time, 
to increase the maximum size of the option orders eligible for routing 
and delivery through AUTOM to 1,000 contracts. The Phlx states that the 
AUTOM system has the capacity to operate with a maximum order size of 
1,000 contracts without adversely affecting the functioning of AUTOM 
and AUTO-X.
2. Statutory Basis
    The Phlx believes that the proposal is consistent with Section 
6(b)(5) of the Act \4\ in that it is designed to promote just and 
equitable principles of trade and to prevent fraudulent and 
manipulative acts and practices, as well as to protect investors and 
the public interest by extending the benefits of AUTOM, including 
prompt and efficient order handling, to orders for up to 1,000 
contracts. The Phlx believes that the proposal should also further 
increase efficiency through automation from order delivery to execution 
to reporting, as these orders may currently be delivered by floor 
brokers.
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    \4\ 15 U.S.C. 78f(b)(5)
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx does not believe that the proposed rule change will impose 
any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(b)(f)(6) thereunder 
\6\ because the proposed rule change (1) does not significantly affect 
the protection of investors or the public interest; (2) does

[[Page 50263]]

not impose any significant burden on competition; (3) by its terms, 
does not become operative until 30 days after the date on which it was 
filed or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
and (4) the Phlx has provided the Commission with written notice of its 
intent to file the proposed rule change at least five days prior to the 
filing date. At any time within 60 days of the filing of such proposed 
rule change, the Commission may summarily abrogate this rule change if 
it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Phlx. All submissions should refer to File No. SR-PHLX-00-35 and should 
be submitted by September 7, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-20883 Filed 8-16-00; 8:45 am]
BILLING CODE 8010-01-M